Hydropower Design under Uncertainties

The design of hydropower is determined by estimates and long-term forecasts. These forecasts and estimates are highly uncertain and make performance evaluation and design choices challenging. Performance evaluation of hydropower projects is affected by a number of uncertainties such as construction cost estimates and energy production forecasts. Recent studies indicate dramatic cost overruns for large hydropower schemes. Accuracy of energy production forecasts are questioned, especially in light of future climate change. It is generally assumed that the risk associated with small plants is much lower compared to large hydropower projects. Policy makers, developers, environmental and conservation organizations, and NGOs often tend to adhere to the principle “small is beautiful”. Small hydropower plants have been intensively supported in many countries despite a knowledge gap about uncertainties affecting small hydropower plants. Based on an evidence-based approach, cost overruns of small and large Swiss hydropower projects were analyzed and compared. In addition, the reliability of mid-term and long-term energy production data was examined. The results show that small hydropower projects, on average, suffer a similar range of cost overrun as large projects. However, the chance that small projects will exceed the estimated costs is much smaller than for large projects. On the other hand, small hydropower projects tend to have more extreme cost overruns than large facilities. This long tail to adverse outcomes indicates a potential for improvement, especially in terms of the methods used for estimating the construction costs, including quality of design, and in terms of appropriate approaches to controlling actual construction costs. In addition, small hydropower plants show a tendency for energy production overestimates. In contrast, the production of large hydropower projects in the long term was on average 8% higher than the estimated figures. These findings challenge the current assumption that large hydropower schemes are generally highly risky structures and that small hydropower projects should be preferred to reduce associated threats. The other part of the study focuses on design methods that are useful for the management of uncertainties. Hydropower projects face long-term uncertainties, such as electricity price and future inflow. Whereas it is commonly agreed that these forecasts are highly uncertain, there remains the question of how to make design decisions under the consideration of uncertainties with the final aim to decrease the threats and increase the opportunities. Various past research studies have suggested and applied different design methods to overcome this problem. Recent studies focused on Robust Decision Making. Other studies applied real option valuations for hydropower schemes. Another method that has been identified as a promising approach is the Info-Gap Decision Theory, but it has not been formulated and applied to hydropower projects up to now. There is very limited experience with the application of these methods in real hydropower projects. To promote their application in the engineering practice, a new framework for hydropower projects is introduced, allowing a straightforward selection of the design objective and the required design method. In addition, the Robust Decision Making, Info-Gap Decision Theory and Flexible Design methods were formulated and applied to a real hydropower project.


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